MITCHELLS & Butlers shareholder Standard Life Investments yesterday branded Piedmont’s 230p per share possible offer “insulting” and accused it of destabilising the company, as the firm rejected the approach.
David Cummings, SLI’s head of UK equities, lashed out at Piedmont owner Joe Lewis, claiming his attempt to buy the pub group outright was “wholly unsatisfactory”.
“It is clear that the influence of Piedmont has impeded the board from acting in the interests of all shareholders,” Cummings said in a statement. “This offer is insulting to all other shareholders.”
Analysts also applauded M&B’s decision to reject Piedmont’s possible offer after the board said it “significantly undervalues the company”.
“Such an offer would be derisory,” said a Numis analyst. “To some, it may appear that the sole purpose of Piedmont’s recent and ongoing disruptive behaviour is to enable it to acquire the company on the cheap.”
Barclays Capital analysts said a fair price for M&B would be 360p per share, valuing it at £1.4bn. But they said valuing the shares remains “highly subjective” until other major investors state their position.
“We are concerned that if a concert party is formed, other investors would be left as minority shareholders, potentially being squeezed out of their positions at a discount to our opinion of value,” they said.
The possible Piedmont bid announced on Monday is Lewis’ second approach in less than a month. His initial 224p offer on 29 August was dismissed by M&B’s interim chairman Bob Ivell, interim chief executive Jeremy Blood and finance director Tim Jones, who “would not recommend an offer on such terms”.
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An advisory team from UBS Investment Bank, led by Nick Reid, is advising Mitchells & Butlers (M&B) as Piedmont moves to take full control of the pub chain.
Reid, who joined the Swiss bank five years ago following his departure from Goldman Sachs, was named as the bank’s joint head of investment banking for Europe, Middle East and Africa in March, alongside James Hartop, as part of a reshuffle of its top investment banking team. Reid also led the UBS team working on the Kraft Cadbury deal in 2010.
He is joined on the UBS advisory team for M&B by managing director Jackie Lee and co-head of leisure Nick Bishop.
The legal adviser for M&B is Freshfields Bruckhaus Deringer, led by Christopher Mort. In 2010, Mort co-led the team that advised the leisure group on the disposal of 333 of its non-core pubs, netting £373m from their sale to private equity house TDR Capital.
On the other side of negotiations, PwC is the acting investment adviser for Joe Lewis’s Piedmont as it attempts to convert its 22.8 per cent shareholding into full ownership of M&B.
On the public relations front, M&B is represented by Finsbury, and Piedmont by Maitland.